Helping employees with contract review and negotiation
Most Ohio employees don’t have an employment contract, and as a result are covered by what is known as the “at-will” employment doctrine. Employment at-will means that, absent illegal employment discrimination or retaliation, either you or your employer can generally end the employment relationship at any time. An employment contract can create an exception to the employment at-will doctrine.
An employment contract is an agreement between the employer and employee regarding some aspect of the employment relationship. There are several different types of employment contracts, and signing one can dramatically affect an employee’s rights and responsibilities under Ohio law.
If you have been presented an employment contract, or want to negotiate a contract with your employer, you should seek the advice of an experienced Cleveland employment law attorney. At Bolek Besser Glesius LLC, we have more than 50 years of combined experience in employment law, and have helped many employees protect their rights by reviewing and negotiating all types of employment contracts.
Advising on all types of employment agreements
An employment contract puts in writing various promises and obligations between the employer and employee. An employment contract might address a wide range of topics, for instance:
- Duration of employment. A contract might state a set period of employment, although it does not have to. It might promise employment for one year, or any length of time. In some cases, a contract might state that the employee’s period of employment will be automatically renewed for an additional period unless one side or the other gives notice of termination.
- Job duties. An employment contract will usually list the job duties expected from the employee.
- Salary and benefits. Employment contracts tend to address the terms of compensation, including salary, any bonuses or commissions, and whether the employee is entitled to any benefits such as health insurance, life insurance, and vacation or sick pay.
- Grounds for termination. An employment contract that lists the grounds for termination, for instance for “good cause,” means the employee is no longer employed at-will, and can be fired only for the reasons listed in the contract.
- Arbitration provisions. Some employers attempt to impose arbitration provisions that take away an employee’s right to file a lawsuit for breach of contract, employment discrimination, or anything else. Employers tend to impose arbitration provisions because employees win less often in the arbitration forum and recover less for their injuries when they do win. And because the entire process is confidential, the public does not know what the employer has done. For all these reasons, Ohio employees need to be very wary of signing an employment contract with an arbitration provision.
- Non-competition clauses. It is not uncommon for an employer to require an employee to sign a non-competition clause as a condition of employment, prohibiting the employee from working for a competitor for a period of time after his or her employment ends. In some situations, employers will require employees to sign a non-competition agreement but not offer the employee anything in exchange except continued at-will employment for no guaranteed length of time.
These are only some of the terms that can be found in an employment contract between an employer and employee. When done fairly, however, an employment contract will offer the employee some job security in exchange for giving his or her best efforts to the company.
Employment contracts for executives, sales employees, and union employees
Corporate executives, directors, and senior managers will often have employment contracts that detail salary, job duties, and grounds for termination. In some instances, these employees will also be offered protection in the event the company is taken over or becomes owned by a new entity. These contracts, referred to as “change of control” contracts, set forth severance benefits the employee will receive in the event he or she is fired due to a sale, merger, or corporate takeover in which the company’s ownership or Board of Directors dramatically changes. Interpreting change of control contracts under Ohio law can be extremely complicated, and enforcing change of control contracts can be extremely contentious. At Bolek Besser Glesius LLC, we have experience representing corporate executives in a variety of contract law matters under Ohio law.
Employment contracts are also common for sales employees. These contracts typically detail a commission structure, among other things. If the employer does not pay, the sales employee can sue for breach of contract based on unpaid commissions or salary. A salesman who is an independent contract rather than an employee might also have a claim for unpaid commissions under Ohio Revised Code section 1335.11. That section generally entitles salesmen to be paid for all commissions owed under a contract within 30 days after the contract ends. When an employer fails to comply with the obligation, it can be liable not only for the unpaid commissions, but for “exemplary damages” of up to three times any amounts unpaid as well. In addition, the statute allows the salesman to recover his or her attorney fees and costs of the lawsuit. As noted, however, the unpaid commissions statute applies only to independent contractors rather than employees, a complex legal distinction that will often require the assistance of a skilled Cleveland employment lawyer.
Employees who belong to a union will typically have a contract with their employers known as a Collective Bargaining Agreement, or “CBA.” A collective bargaining agreement is a form of employment contract negotiated between the employer and the union on behalf of all the union members. A typical CBA details many aspects of the employment relationship, including job assignments, pay, promotions, discipline, sick leave or medical leave, attendance, and any other policy concerning the terms and conditions of employment. The collective bargaining agreement gives employees protection that they would not have if they were employed at-will. When an employer violates a collective bargaining agreement, the employee may have various rights under Ohio law or under the federal National Labor Relations Act, including a claim for breach of contract.
Negotiating severance contracts and protecting employees
One of the most important types of employment contracts comes at the end of the employee’s employment. When an employer fires an employee, it might offer a severance agreement, which itself is a type of employment contract.
Employers are generally not required to offer employees severance, and there is no “standard” amount of severance that an employer is required to pay. But when employers do offer severance, they want various promises from the employee in return. As a result, severance agreements often contain very serious limits on an employee’s rights. Some of the common provisions in severance contracts include:
- Waiver of the right to sue. The main promise employers seek in exchange for severance pay is the employee’s promise not to sue the employer for anything relating to the employee’s employment or termination. A typical severance agreement waives the employee’s right to sue the employer for things like breach of contract, employment discrimination, whistleblower retaliation, harassment, and any other aspect of the employment relationship.
- Confidentiality. Employers usually require that the employee keep the amount of severance pay confidential and not share it with anyone except a spouse, legal advisor, financial advisor, or tax preparer. Employers also frequently require that the employee not tell others about his or her legal claims against the company.
- Non-disparagement. In some cases, a severance contract will require the employee to refrain from making negative statements about the employer, regardless of whether or not they are true.
- Agreement not to compete. As discussed above, the employer might require that the employee not compete with the employer for a period of time.
- No-rehire provision. An employer might require the employee to agree that he or she will not work for the employer again in the future, and if the employee applies for employment, he or she can be summarily rejected. While there is some debate over whether these clauses are legal when an employee has asserted an employment discrimination claim, it is not uncommon for employers to try and include them in a severance contract.
There are several important limitations on employers when offering severance to an employee. For instance, an employer cannot require an employee to waive his or her right to vested pension benefits. Nor can an employer require an employee to waive the right to file a Charge of Discrimination with the U.S. Equal Employment Opportunity Commission or the Ohio Civil Rights Commission, although the employee may be required to waive the right to receive financial benefit from doing so.
When an employee is over 40 and the employer asks the employee to waive a potential age discrimination claim, the federal Older Workers Benefit Protection Act (“OWBPA”) requires the employer to include several written protections for the employee in the severance agreement. Under the OWBPA, any waiver of an age discrimination claim must:
- Be written in a manner designed to be understood by the average person;
- Specifically refer to the Age Discrimination in Employment Act as a claim being waived;
- Offer something of value in exchange for waiving the claim that the employee would not otherwise be entitled to receive;
- Advise the employee to consult with an attorney of his or her own choosing;
- Give the employee a period of not less than twenty-one days to consider whether to sign the agreement; and,
- Give the employee seven days to revoke his or her agreement after signing.
Regardless of what the employer is offering or what claims might be waived, before signing a severance agreement, employees should seek the advice of an experienced Cleveland employment contract attorney. Before you put your name on the dotted line, take steps to ensure your rights are appropriately protected.
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If you need help with an employment contract in Cleveland, Lake County, Lorain County, Medina County, Akron, or anywhere else in Northeast Ohio, contact the employment law attorneys at Bolek Besser Glesius LLC today to request a free consultation.